Hill hears AOL, Time Warner
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March 2, 2000: 4:00 p.m. ET
Before Senate committee, Case and Levin reiterate vow to allow Internet competition
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NEW YORK (CNNfn) - The CEOs of America Online Inc. and Time Warner Inc. on Thursday reiterated a pledge to keep competition alive on the Internet, by opening Time Warner's cable systems to AOL's rival Internet service providers after the companies complete their $145 billion merger.
"We hope AOL-Time Warner will lead a new era of innovation within our industry by providing consumers with an ever-expanding array of content from music to movies to publishing to communications to financial services," Stephen Case, AOL's chairman and chief executive officer, told the Senate Judiciary Committee Thursday, in ongoing hearings over whether the proposed merger would benefit consumers.
"And AOL-Time Warner will never limit content diversity on any of our systems. If we did try to do that, consumers would waste no time in migrating to other Internet and media services," Case said.
Click here to view Thursday's testimony, Real Player or Windows Media
Case also said both companies would continue to develop what they believe is already the "best privacy policy in the industry built on core principals of notice and choice."
He also said Time Warner is "a company that is committed to journalistic integrity and consumer trust, both on- and off-line."
A moral obligation
Members of the Judiciary Committee grilled Case and Gerald Levin, Time Warner's CEO, about Internet privacy, particularly for children, and consumer access to competitors, especially where AOL's popular Instant Messenger software, which is used by 80 million people.
"...With respect to Time Warner cable systems, no preference will be show for affiliated services, soon-to-be AOL, as opposed to unaffiliated services," Levin assured the committee. "I would also say to you that there is no intention of flipping the coin, that the wonderfully diverse material coming from Time Warner will exclusively be coming through AOL."
On the matter of preserving consumer privacy on the Internet, Levin said both companies are obligated to do so beyond the business reasons.
"...The issue of privacy is not for us simply as a matter of business practice. It's just fundamental to human dignity," Levin said.
A "memorandum of understanding"
On Tuesday, the first day of testimony before the committee, the companies touted a "memorandum of understanding," in which they pledged to offer consumers a choice of many ISPs, including AOL, across Time Warner's broadband cable systems, a policy known as open access.
Consumer groups have been concerned that Time Warner, the nation's No. 2 cable company and CNN's parent, and industry leader AT&T could impede competition in cable-based Internet service.
The move to link consumers to the Internet through high-speed cable connections was seen as a driving force behind the deal, which was first valued at $182 billion in stock and debt when announced on Jan. 10. The deal is now worth about $145 billion because AOL's stock price has fallen.
The merger would be the second largest of all time, after Vodafone AirTouch's planned $198 billion purchase of Germany's Mannesmann.
AOL (AOL: Research, Estimates) shares closed down 1 to 56 Thursday. Time Warner (TWX: Research, Estimates) shares closed down 1-11/16, to 82-11/16.
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